U.S. Healthcare Providers Should Prepare for an Expansion of Medicare Advantage Plan Contract Offers in 2018

Hospitals and other healthcare providers should prepare for an increase in the number of competitive Medicare Advantage plans as national insurers begin to shift resources from individual commercial marketplaces in various states to the more profitable, more secure Medicare Advantage (MA) and Part D markets.

Expect to see national plans with brands you know, such as Anthem, Cigna, Aetna, Humana along with other less familiar and new plans popping up all over. They are likely to be very aggressive in pricing, network participation and innovations in shared-risk reimbursement because they won't be distracted by mergers and acquisitions. 

Expect to see many more Medicare and Medicaid beneficiaries shopping plan designs that all rely upon provider support for sub-contracted delivery. With the stock market at an all-time high, consumer confidence tends to increase and more people decide to retire This can change market dynamics including Medicare Secondary Plan (MSP) enrollment shifts.  Plans you've not heard of along with those long established will exit ACA exchanges. They will re-assign marketing dollars to pursue the lucrative Medicare Advantage market.

Will you be willing to share risk with them? If each one attracts too few subscribers, expect to see more capitation offers that dumps financial risk for the cost of care into the lap of providers. Expect to see aggressive "economic credentialing" in ACOs, IPAs and PHOs - a term we haven't seen since the 1990s, whereby these groups accept aggressive contracts that simulate the failed HMO capitation model where the full insurance risk was transferred to the provider.

Timing of Maximum Negotiation and Market Entry Leverage

Are you going to "enable" the plans' market entrances? Will you have the necessary contracting and claims infrastructure necessary to manage and administer these payment models successfully? 

Remember one thing: They cannot enter the market without a provider network in place to service the enrollees. You decide if or when that happens.

Once you give a Letter of Intent, they take that straight to the state insurance regulators to represent to regulators that they have the network that is adequate to care for enrollees - if only the regulators will issue the Certificate of Authority to operate and sell policies and enroll subscribers to the health plan. That Letter of Intent is your ticket to financial demise and loss of negotiation leverage the minute you sign one that doesn't properly protect your interests. It all depends on how it is worded and what the state regulators interpret when they read it.

Hiding the contract landmines in plain sight

Expect to see the following landmines in many of these new Medicare Advantage and Medi/Medi agreements:

Member Hold Harmless.   Except for Copayments, Coinsurances and Deductibles, Provider shall look only to Health Plan for the payment of Covered Services rendered to Members.   In no event, including, without limitation, nonpayment by Health Plan, insolvency of Health Plan or Health Plan or breach of this Agreement by Health Plan or Provider,  shall  Provider bill,  charge,  collect a deposit from,  seek compensation, remuneration or reimbursement from, or have any recourse against Health Plan and/or Member or any persons acting on Member's behalf for Covered Services provided pursuant to this Agreement.  The preceding provisions do not prohibit the collection of Copayments, Coinsurance and Deductibles from Members, as set forth in the applicable Plan Document. Provider agrees that: (a) these provisions shall survive the termination of this Agreement, regardless of the cause giving rise to the termination, including without limitation, insolvency of Health Plan or Health Plan, and shall be construed for the benefit of Members; and (b) these provisions shall supersede any oral or written contrary agreement now in existence or hereafter entered into between Provider and Members or persons acting on their behalf or on whose behalf they are acting hereunder insofar as such contrary agreement relates to liability for payment for, or continuation of, Covered Services provided under the terms and conditions hereof; (c) Health Plan's obligation to Provider will be determined pursuant to the terms of the Member's Plan Documents and said obligation, if any (exclusive of any legal obligation of the Member for Copayments, Coinsurance and Deductibles), in addition to any payment due from the primary payer, will constitute full satisfaction of all amounts owed by the Member and/or Health Plan; and (d) should the Member's benefit program not provide for coordination of benefits or non-duplication of benefits, Provider will accept the Health Plan's payment in full satisfaction for Covered Services.

And another: (Risk of the unknown population - no minimum threshold)

Health Plan makes no representations or guarantees concerning the number of Participants it can or will refer to Provider under this Agreement.

And another: (Most favored nations)

If during the terms of this Agreement, Provider enters into Arrangements with any other company concerning the services provided hereunder which provides greater benefits or more favorable terms or rates with respect to the obligations of Provider or rights of Health Plan, this Agreement shall thereupon be deemed automatically amended to provide a 5% advantage to Health Plan. Provider shall notify Health Plan of all such more favorable rates, benefits or terms thirty days prior to the effective date of such agreement. Provider shall provide Health Plan with cost comparisons in the event that price structures vary.

And another: (Predicting the risk-based capitation payments without knowing the population distribution or its health status)

The rates set forth in Exhibit B shall be effective for a period of two years commencing from the Effective date. On or before December 31, 2018 and every two years thereafter, Provider and Health Plan shall agree upon the rates applicable for the succeeding two year period (i.e., on or before December 31, 2018, the terms for the period January 1, 2020 through December 31, 2022 shall be agreed upon; on or before December 31, 2019, the rates for the period January 1, 2021 through December 31, 2023 shall be agreed upon, etc.). If Provider and Health Plan cannot agree, then the rates in effect at the time shall continue through the two?year period. 

And another: (Moving the Goalpost)

In the event that Health Plan has not been licensed or has not received any applicable regulatory approval for use of this Agreement prior to the execution of this Agreement, this Agreement, shall be deemed to be a binding letter of intent. In such event, the Agreement, shall become effective on the date that such regulatory approval is obtained. If Health Plan is unable to obtain such licensure or approval after due diligence, Health Plan shall notify Provider and both parties shall be released from any liability under this Agreement. provided however, that if such licensure or approval is obtained upon the condition of Health Plan's amendment of this Agreement, then this Agreement shall continue and Health Plan shall amend the contract offer accordingly.

And one more: (Barrier to Entry by other Competitors)

Provider agrees that during the term of this Agreement for a period of one year following the date of termination of this Agreement, neither Provider nor any person or entity controlled by, controlling or under common control with Provider, whether directly or indirectly through any present or future affiliates, shall enter into any agreement with any employer, insurer, labor union, trust or other organization or entity which had a Service Agreement in effect with Health Plan or a Health Plan Affiliate during the one?year period prior to termination of this Agreement for the provision of the services which are the subject of this Attachment. 

Care to learn more about this?

I offer contract strategy tune ups, outsourced contract reviews and managed care contracting training through the Healthcare Business Institute located in St George, Utah. My Master Classes are 1-2 days in duration and are limited to only 12 students to ensure maximum class interaction.

I can also bring the Master Class to your location, if you need to train a group. I've worked with all types of Medicare Advantage and Medi/Medi providers and all kinds of payer contracts and reimbursement models for Medical Practices, HME / DME Companies, Laboratories, ASCs, Hospitals, Behavioral Health Companies, Home Health Companies, Substance Abuse and Rehab Companies / Facilities, Infusion Therapy Companies, Wound Care Companies, and other Ancillary providers. 

To get in touch, please call me at 800.727.4160.

About Maria Todd

Maria Todd is a seasoned managed care contractor and analyst with more than 35 years of experience negotiating third-party payer contracts for doctors, hospitals, and other healthcare providers. She is the author of 18 indispensable handbooks and business management books written for physicians, hospitals and healthcare organizations.

She teaches Master Classes on Managed Care Contracting and Negotiation, Bundled Case Rate Development, Capitation, and Appealing Denied Claims. She helps clients with contract analysis and backs them up or attends negotiations on behalf of the client. She frequently teaches at the Healthcare Business Institute and also offers personalized coaching for hospitals and doctors at Red Mountain Resort and the Inn at Entrada, both located in St George, Utah (112 miles north of Las Vegas).